We toughened due diligence after scams in India: Paul Rowley of De Beers

The world’s leading rough diamond miner, De Beers, has decided to approve sightholders only with 70: 30 debt equity ratio for any contractual requirement of rough diamond for the financial year 2017-18, says Paul Rowley, Executive Vice president, De Beers in an interview with Dilip Kumar Jha. Edited excerpts:

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What are major fallouts of the recent scam in diamond industry in India?

We have made our due diligence more stringent than ever before. We have introduced the annual best practices (BPP) assurance process in which our sightholders are required mandatorily to adhere to a comprehensive code of ethics. We would be monitoring the adherence on regular basis. De Beers’ due diligence would ensure all sightholders achieve leading industry standard in terms of transparency, corporate strategy and governance; social, ethical and environmental compliance.

What about financial compliance which De Beers would be primarily looking into?

We have made contractual requirement mandatory for our sightholders for the financial year 2017-18. Evidence of International Federation of Red Cross and Red Crescent Societies (IFRC) compliance corporate structure for the entire sightholders’ group is also required. We call for annual consolidated financial statement for the entire sightholder group expressed into IFRS or Ind-AS standard. We have also made mandatory audited annual financial statement of the company willing to become our sightholder. Apart from that, prior approval from De Beers of the sightholder group is needed. Above all, we would concentrate on companies with 70:30 of debt equity ratio.

What is your rough diamond production plan for 2018?

De Beers produced 33.45 million carats of rough diamond for 2017, 22 per cent increase from 27.34 million carats for 2016. Based on the consistent demand from all across the world, we estimate similar production for 2018.

What is your forecast of rough diamond demand for the rest of the year?

The global rough diamond demand has been a little bit stronger in the first quarter of calendar 2018. We expect the consistency in global rough diamond demand to continue during the rest of the period during the year. The consistency in the global rough diamond demand has been the second year in a row. Thus, our beneficiation plan is also going ahead as per plan. For long term, however, diamond demand will certainly outpace supply.

Has consistency in demand translated into some price increase this year?

Consistency in demand has resulted definitely into some price increase. In fact, polished diamond prices have been very encouraging resulting into stronger rough’s prices as well. Hopefully, the trend would continue during the remaining three quarters of calendar 2018.

De Beers has been investing a lot on diamond promotion. What is your plan for 2018?

We invested $140 million on diamond promotion in 2017 for global markets. The same amount would be invested in promotion this year as well. Since India processes 70 per cent of world’s diamond by value and 90 per cent by volume, Indian processors would certainly get benefit of our promotion initiatives.